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Home My WebLink AboutITEM V-Jk CITY OF BURN WASHINGTON Memorandum TO: Councilmember Lynn Norman, Chair, Planning & Community Development Committee Councilmember Nancy Backus, Vice-Chair, Planning & Community Development Committee Councilmember Rich Wagner, Planning & Community Development Committee CC: Mayor Pete Lewis FROM: Kevin Snyder, AICP, Director, Planning & Development Department DATE: December 8, 2010 SUBJECT: DISCUSSION & INFORMATION: Ordinance No. 6342 - Construction Sales Tax Exemption Please Note: Subsequent to the issuance of draft Ordinance No. 6342 and this associated memorandum for the cancelled November 22, 2010 Committee meeting, staff from Planning and Development, Finance and the City Attorney's Office have worked on refinements to the draft Ordinance. These refinements are intended to clarify requirements and information needs and requirements. These changes are represented by underlined text that are new text additions and strike-out text that are text deletions. Similar to other communities, the City of Auburn has been impacted by the national economic downturn that has impacted the local economy. These impacts have included diminished commercial construction activity that has reduced the number of new commercial developments that have the potential to generate significant sales tax revenue for the City of Auburn. As the Planning and Community Development Committee is aware, the City has very few incentive tools in economic development toolbox. City staff has identified a new economic development incentive in the form of a sales tax exemption for purchasers who have paid a tax authorized under the provisions of Chapter 3.60 (Sales and Use Tax) of the Auburn City Code on construction materials, fixed equipment, or machinery installation directly related to the construction of new commercial buildings, expansion of existing commercial buildings that creates new or expanded building floor area that generates additional sales tax revenue on property zoned C3 (Heavy Commercial District), and C4 (Mixed Use Commercial) or on sales of or charges made for labor and services rendered in respect to such construction or installation of such machinery or equipment. Staff from Finance, the City Attorney's Office and Planning and Development have prepared a draft ordinance - refer to attached draft Ordinance No. 6342 - that would run for a period of four years, be limited to properties in the C3 (Heavy Commercial District), and C4 (Mixed Use Commercial) and be available only to a limited class of eligible business types based on statutory sales tax coding. Staff believes that the Council's passage of this ordinance could be a positive economic development action that will distinguish the City of Auburn in the highly competitive regional marketplace and be an effective community marketing tool. ORDINANCE NO. 6 3 4 2 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, AMENDING SECTION 3.60 OF THE AUBURN CITY CODE WHEREAS, Auburn City Code Chapter 3.60 imposes a sales or use tax, as the case may be, as authorized under RCW 82.14.030 (2), upon every taxable event, as defined in RCW 82.14.020, occurring within the City and specifies that the tax shall be imposed upon and collected from those persons from whom the state sales tax or use tax is collected pursuant to Chapters 82 WHEREAS, the City of Auburn through the development of new certain zoned areas of the City generation within the City through n event opportunities ivities that create taxable incentivize the construction of new or ex exemption an the City of Auburn of the City by providing a sales tax purchasers who have paid the tax imposed in materials, fixed equipment, or machinery installation directly related to the construction of new commercial buildings, expansion of existing commercial buildings, or tenant improvements to existing commercial buildings, or on sales of or charges made for labor and services rendered in respect to such construction or installation of such machinery or equipment; and, WHEREAS, the Auburn City Council finds that it is in the public interest because of current economic conditions and challenges to create an economic incentive for the increased sales tax revenue Ordinance No. 6342 December 8, 2010 Page 1 of 4 construction of new or expanded businesses in certain zoned areas of the City for businesses that will contribute to increased sales tax revenue generation within the City through new or increased sales activities that create taxable event opportunities, NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AUBURN, WASHINGTON, DO ORDAIN as follows: Section 1. Amendment to City Code. That Chapter 3.60 of the Auburn City Code, entitled `Sales or Use Tax,' regarding the imposition of sales or use taxes within the City of Auburn, is hereby amended to read as follows: Ilk E Targ con construction or instaiiation of such r an exemption as provided for in this 2. For purposes ection, the following definitions apply: (a) "Commercial building" means a structure that has, as its primary purpose, a Commercial Use as that term is defined in ACC 18.04.240. (b) "Expansion" means to add to the floor area or height of a building. (c) "Purchaser: means a person or entity that is the recipient of a good or service. 3. Eligible Target Business Class. The construction sales tax exemption specified in Section 3.60.035.1.a-b shall only apply to those businesses engaged in normal business activities under the following classifications of businesses occurring within the specified zoning designations: Ordinance No. 6342 December 8, 2010 Page 2 of 4 3.60.035 - Construction Sales Tax Exemption (a) General Merchandise, Warehouse Club, SuperCenter - Sales Tax Classification Code 45291 (b) Building Materials and Garden Home Center - Sales Tax Classification Code 44411 (c) Electronics and Appliances - Sales Tax Classification Code 44311 (b) A purchaser may not apply than once per quarter. The pu claimed and the qualifying pu purchaser must retain all recor (c)T pro\ C ity ,mittance under this section more frequently r must specify the amount of exempted tax s for which the exemption is claimed. The (ided to the City in making its claim. eligibility under this section based on the information /rhich is subject to audit verification by the City. If the I remit eligible taxes paid to the purchaser. 5. Appeals. Any applicant aggrieved by an action of the City concerning eligibility or computation of remittance under this Section may file a written appeal to the City's Hearing Examiner in accordance with Chapter 18.66 ACC within fourteen (14) calendar days of receipt of the City's decision. The Hearing Examiner is specifically authorized to hear and decide such appeals and the decision of the Hearing Examiner shall be the final action of the City. Section 2. Implementation. The Mayor is hereby authorized to implement such administrative procedures as may be necessary to carry out the directions of this legislation. Ordinance No. 6342 December 8, 2010 Page 3 of 4 Section 3. Severability. The provisions of this ordinance are declared to be separate and severable. The invalidity of any clause, sentence, paragraph, subdivision, section or portion of this ordinance, or the invalidity of the application thereof to any person or circumstance shall not affect the validity of the remainder of this ordinance, or the validity of its application to other persons or circumstances. Section 4. Effective date. This Ordinance shall take effect and be in force five days from and after its passage, approval and publication as provided by law. INTRODUCED: P APPR OFAUBURN ATTEST: APPROVED AS T Daniel B. Heid, City Attorney Published: IS TER B. LEWIS MAYOR Ordinance No. 6342 December 8, 2010 Page 4 of 4